Reverse Volume And HMBS Issuance Rise, Refi Levels Low

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Reverse Volume And HMBS Issuance Rise, Refi Levels Low

Jun 14, 2023 | News | 0 comments

The reverse mortgage industry is rebounding after a significant drop in April. In May, HECM endorsements increased by 4.6% to 2,053 loans, showing signs of recovery. The decline in April was largely influenced by American Advisors Group (AAG). Despite challenges like high rates and a competitive lending market, the industry is adapting to improve its position.

New HECM-backed securities production reached $580 million in May, its highest month in 2023. While adjusting after the HECM-to-HECM refi boom, originators are working to adapt to current business conditions. According to John Lunde, president of Reverse Market Insight, the industry is resilient.

According to RMI, three of the smallest volume regions experienced the largest gains, while eight out of ten regions saw improvements. The reason behind this is unclear but RMI will monitor the situation. RMI also mentioned that any increase in volume for FAR due to AAG’s business has not yet been reflected in the data.

This indicates that FAR and the second most significant lender, Mutual of Omaha Mortgage, may vie for the leading position. HUD’s “HECM Snapshot” report for April, reviewed by New View Advisors, indicates that H2H refis accounted for about 10% of industry volume in May, showing a significant decline compared to the peak of the pandemic.

According to New View’s HMBS Issuance report, HMBS issuance activity reached its highest point in 2023, but it still falls far short of previous highs. Following FAR’s acquisition of AAG, four HMBS issuers now dominate 90% of the reverse mortgage secondary market, with FAR leading in May with $200 million.

Last year set a record with $14 billion in HMBS issuance, but the industry is unlikely to come close to that figure by the end of 2023. Over the past five months, the industry has issued just over $2.5 billion. New first-participation production slightly decreased in May to $353 million, consistent with the levels seen earlier in 2023.